IFRS 9 isn’t a new topic, but its relevance has never been greater. Even after almost a decade of grappling with its complexities, many institutions still face challenges that are either deemed too expensive or nearly impossible to overcome – a mindset that hinders meaningful progress.

Consider These Key Questions 

• Seamless Operations?
  Is your expected credit loss (ECL) process truly smooth at month-end and quarter-end? Are you happy with the performance metrics?

• Transparent Oversight/Overlays?
  Do you confidently address regulatory queries on management overlays of your ECL results, as scrutinized by the ECB and the Bank of England/PRA?

• Data Integrity?
  Can you trust the quality and lineage of the data powering your PD, LGD, and EAD models? How good is your data?

• Agility in Analysis?
  How prepared are you to run what-if analyses for ad-hoc management queries and macro-economic events?

• Integrated Processes?
  Is your stage 3 individual impairment recovery process embedded in your overall IFRS 9 workflow? Or is it done completely separately?
• Cost-Effective Value?
  Are you extracting enough value from your current setup relative to its annual cost?

Our market research indicates that many financial institutions struggle with one or more of these critical areas, confirmed by recent ECB on-site audits and the PRA’s Dear CFO letter. You might ask yourself: why is IFRS 9 still a pressing topic? After all, many countries set its implementation deadline back in January 2018. The answer lies in today’s dynamic environment.

Managing IFRS 9 Today for a Competitive Edge Tomorrow

With rapid shifts in macroeconomic conditions, geopolitical tensions, climate risks, and the rise of innovative FinTech disruptors, the way you manage IFRS 9 today will dictate your competitive positioning for years to come.

Data: The Cornerstone of Transformation 

It all starts with data. Your institution must have a single source of truth—one that is trustworthy, transparent, and underpinned by robust data quality and lineage standards. With regulators renewing their focus on BCBS 239 and intensifying oversight, any future-proof IFRS 9 platform must begin with a unified, compliant Datamart that serves Finance, Risk, and Regulatory functions alike. Less than 10% of financial institutions are fully compliant with BCBS 239.

Agility and Performance in Modeling 

Once your data is in order, the next step is to ensure a user-friendly and agile modeling environment. Change is inevitable — your platform should not only support but also simplify model adjustments. Running what-if analyses, assessing model candidates, and understanding impact prior to adoption should be routine. In today’s fast-paced world, waiting for a monthly cycle is no longer acceptable. You must be ready to run 10 to 100 scenarios per month and respond promptly to ad-hoc management queries with different macro-economic forecasts.

Climate Stress Testing: The Next Frontier 

As if the current challenges weren’t enough, consider the emerging need for robust climate stress testing. If your existing IFRS 9 solution is already struggling to handle traditional scenarios, the gap will only widen when you introduce dynamic balance sheet assumptions and climate stress testing into the mix. Relying on ad-hoc setups — such as standalone Python tools — may provide temporary relief but often creates a parallel universe that’s difficult to maintain, prone to frequent model changes, and riddled with reconciliation issues. To future-proof your institution, your IFRS 9 framework must be capable of integrating climate risk scenarios seamlessly, ensuring that your stress testing remains both strategic and agile.

Transparency and Integration: The Keys to Efficiency 

After results are generated, you need the tools to quickly pinpoint discrepancies and resolve any model shortcomings through clear, transparent result overlays. Furthermore, stage 3 provisioning — often managed as a separate process in standalone tools — must be fully integrated into your overall IFRS 9 workflow to maintain consistency and operational efficiency.

A New Perspective on Investment 

You might be thinking, “Our current system is ‘okay-ish.’ We don’t want to embark on another costly, time-consuming project.” However, a modernized IFRS 9 solution doesn’t have to break the bank or require years to implement. Our experience with both large and small financial institutions show that with the right approach, transitioning can lead to significant net cost savings within a couple of years. At ElysianNxt, we’re committed to proving that upgrading your IFRS 9 framework can be both swift and economical. In fact, we’re so confident in our solution that we offer free proof-of-concepts to demonstrate its potential. One of our IFRS 9 clients KBC Group even remarked, “This sounds too good to be true.”

Let’s Redefine IFRS 9 Together 

The future of IFRS 9 isn’t about patching up cracks or constant re-modelling — it’s about building a resilient, agile foundation that can adapt to ever-changing market demands. I invite you to explore how a smarter, more integrated approach can transform your IFRS 9 processes. Let’s begin with a free proof-of-concept on your data and show you that innovation doesn’t have to be expensive or slow. 

Looking forward to the opportunity to reshape the future of IFRS 9 with you.